Macro Mid-Term
if nominal GDP increased from $11,000 BN in 2003 to $11,800 BN in 2004, the GDP Deflator increased from 104.7 in 2003 to 107.8 in 2004 and the CPI increased from 170.4 in 2003 to 175.1 in 2004, what was the percentage change in real GDP?
4.2%
A car produced in the U.S. by a Japanese company would add to
U.S. GDP but not GNP.
Software produced in Malaysia by a U.S. company would add to
U.S. GNP but not GDP.
is inflation caused by too many dollars or too few goods?
both
A price ceiling is designed to assist producers and a price floor is designed to assist consumers.
false
If you make a one-year loan to a friend and the nominal interest rate is 10%, when your friend pays you back you will be able to purchase 10% more goods and services than you could have at the time you made the loan.
false
In the description of a public good, the inability to exclude refers to both the producers ability to exclude certain consumers as well as certain consumers ability to exclude themselves.
false
Real GDP measures the quality of goods produced but cannot measure the quantity of goods produced
false
The GDP Deflator is constructed using a market basket of good and services that the average household would buy.
false
The unemployment that occurs as workers gather information about jobs and employers collect information about workers is known as
frictional unemployment.
Which of the following would not cause an increase in demand for tickets to a college football game?
A decrease in the price of tickets for this game
If Perry's salary increased from $50,000 in 1995 to $60,000 in 2005 while the CPI increased from 150.3 to 190.7, which of the following would be true?
He could purchase 5.4% fewer items with his 2005 income.
Which of the following is not a shortcoming of real GDP as a measurement tool?
It does not account for inflation.
Assume that the U.S. government makes a law that reduces all car prices by $2,000. What would be the impact on the market for new cars?
None of the above
If the equilibrium price for gasoline is $3.25 and the state government passes a law establishing a price ceiling at $2.50, what would be the result in the market?
The price would decrease and there would be a shortage.
If the equilibrium price for a bushel of wheat is $2.20 and the federal government passes a law establishing a price floor at $3.20, what would be the result in the market?
The price would increase and there would be a surplus.
Ceteris paribus, what would be the impact if the size of the population increased?
The unemployment rate would be unchanged and the labor force participation rate would decrease
Ceteris paribus, what would be the impact if the number of unemployed persons increased?
The unemployment rate would increase and the labor force participation rate would increase.
If an item is a public good, economic theory would suggest that a market will not produce the good efficiently and that government production would be necessary.
True
From the standpoint of a nation's economy, which of the following is true?
We would prefer to see real GDP increase but we are not as concerned about nominal GDP.
If the price of gasoline decreased significantly, what would be the impact on the market for moving services that used large trucks?
a decrease in price and an increase in quantity
Which of the following would not cause a decrease in supply of dining room tables?
a decrease in the current price of these tables
Which of the following would cause an increase in the demand for iPods?
a decrease in the price of music downloads
Common property or some form of group ownership is likely to lead to
a greatly reduced incentive to maintain the property a greatly reduced incentive to conserve the property
Which of the following is most likely to be overused?
a public park
Which of the following is an example of a public good?
a scientific discovery that eliminates all problems with the ozone layer
If a price ceiling on wheat is set at $3.35 and the equilibrium price is $3.85, the result would be
a shortage
If a local professional sports franchise drafts a new star player and goes from worst to first in the standings, what will be the impact in the market for tickets to these games?
an increase in price and an increase in quantity
Which of the following would cause an increase in demand for Dell computers?
an increase in the price of Gateway computers
A price ceiling is
an upper limit on prices designed to assist consumers.
Which of the following is an example of a public good?
an FM radio signal
Which of the following is a characteristic of a public good?
an inability to exclude joint consumption
If bad weather destroys a significant portion of the tomato crop, what will be the impact in the market for tomatoes?
an increase in price and a decrease in quantity
If demand decreases, what is the impact on the equilibrium price and the equilibrium quantity?
both price and quantity will decrease
If the price of GM autos decreases, what will be the impact on the market for GM auto parts - a complement?
both the equilibrium price and equilibrium quantity will increase
Which of the following is least likely to be overused?
cell phones
Tragedy of the commons indicates that
common property will be overused.
Which of the following is an accurate depiction of the income method of calculating GDP?
compensation + interest + profits + rental income + proprietor's income
A price ceiling is intended to assist
consumers
If the economy has reached full employment, which of the following types of unemployment has been eliminated?
cyclical only
The unemployment that impacts workers across all industries is known as
cyclical unemployment.
Assume that there is a significant improvement in the quantity and quality of mass transit (buses and trains) in cities throughout the country. What would be the impact on the market for new cars?
decrease in demand
Which of the following are not necessarily costs incurred as a result of inflation?
decreased purchasing power
inflation
defined as higher prices
If the equilibrium price of a good increased and the equilibrium quantity increased, which curve must have moved in which direction?
demand increased
Assume that an expansion increases the average income level for individuals throughout the economy. What would be the impact on the market for new cars?
increase in demand
Assume that the price of steel decreases significantly. What would be the impact on the market for new cars?
increase in supply
Price floors are designed to
increase prices.
PPI
leading indictor and will give the earliest signal of a change n prices
Which of the following could cause inflation?
loss of resources leading to fewer goods being available increased spending by consumers and businesses
GDP Deflator
market basket consisting of all items produced in the US
Producers Price Index (PPI)
market basket consisting of items purchased by producers
Consumer Price Index (CPI)
market basket consisting of items purchased by the average household
Which of the following is an example of a public good?
national defense an FM radio signal a lighthouse signal
If nominal GDP increased by 6% and real GDP increased by 3.5%, which of the following would be true?
output increased and inflation occurred
If nominal GDP increased by 3.0% and real GDP increased by 3.0%, which of the following would be true?
output increased and prices remained stable
If nominal GDP increased by 6% and real GDP increased by 4%, which of the following occurred?
output increased and the price level increased
If supply increases, what is the impact on the equilibrium price and the equilibrium quantity?
price will decrease and quantity will increase
If supply decreases, what is the impact on the equilibrium price and the equilibrium quantity?
price will increase and quantity will decrease
If the price of remaining Falcons tickets increased and the quantity bought/sold decreased, which curve must have moved in which direction?
supply decreased
According to the Fischer Effect, which of the following are equal?
the change in the rate of inflation and the change in the nominal interest rate
Which of the following must add to current GDP?
the purchase of a Chevrolet Corvette produced this year in Michigan the purchase of a Honda Accord produced this year in Ohio a car wash purchased in Georgia
Ceteris paribus, if we use the expenditure method of calculating GDP we can see that an increase in imports will lead to a decrease in GDP.
true
Real GDP essentially counts the number of good and services produced within our economy, while nominal GDP essentially counts the dollars used to buy those goods and services.
true
The CPI is constructed using a market basket of good and services that the average household would buy.
true
